If ministers have decided to travel in smaller convoys, and bureaucrats are conducting business without logging air miles, we can’t complain. For, frugality is always a virtue – not just in a crisis. As George Eliot said of a wealthy family: “They never suffered a pinch of salt to be wasted.” The belief that “money saved is money earned” is also universal. So, let these habits stick even when Hormuz crisis ends, and good times return. Because every barrel of oil, every ingot of gold, and every bag of fertiliser we don’t import, makes rupee stronger, boosting its purchasing power.
But thrift is good only till it eliminates waste. Putting essentials on the chopping block is silly. Should govt cut back on infra works now, to shore up finances? No, for that would hurt employment, income, and demand, slowing down the economy even more. It would also delay the process of making India an attractive investment destination for businesses. Likewise, we have argued against burgeoning cash transfers before, but stopping them now could increase hardship for poor families, especially when agri prices are likely to shoot up due to a fertiliser crunch.
When it comes to regulating consumption, rather waste, price signals are more effective than moral positions. So, Centre’s decision to hike import duty on gold and silver, from 6% to 15%, is a good idea. It will not only curb demand, and conserve forex, but also leave more money in govt’s hands for public works. Watch out for increased smuggling, though.
And public works could be key to sustaining growth this year, and maybe a part of next year as well. So, govt will need more revenue. Hiking taxes is the easy way, with one big risk – reduced private consumption demand. Instead, govt should dust some of the ideas Niti Aayog has floated over the past few years, such as National Monetisation Pipeline that can bring in many lakhs of crore rupees. For instance, govt has monetised Rs 5.3L cr worth of core assets, such as coal blocks, over the past four years. But monetisation of non-core assets, especially spare land, has moved slowly, despite the formation of National Land Monetisation Corporation in 2022. GOI, including major ministries like Railways and Defence, owns roughly 15,500 sqkm, or roughly 38L acres. There was a proposal last year to encash 81,000 acres of spare cantonment land, worth some Rs 8L cr. Set it rolling now.
Disclaimer
Views expressed above are the author’s own.
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